Correlation Between Applied Finance and Sierra E
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Sierra E at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Applied Finance and Sierra E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Sierra E Retirement, you can compare the effects of market volatilities on Applied Finance and Sierra E and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Applied Finance with a short position of Sierra E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Sierra E.
Diversification Opportunities for Applied Finance and Sierra E
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Applied and Sierra is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Sierra E Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra E Retirement and Applied Finance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Applied Finance Explorer are associated (or correlated) with Sierra E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra E Retirement has no effect on the direction of Applied Finance i.e., Applied Finance and Sierra E go up and down completely randomly.
Pair Corralation between Applied Finance and Sierra E
Assuming the 90 days horizon Applied Finance Explorer is expected to under-perform the Sierra E. In addition to that, Applied Finance is 3.26 times more volatile than Sierra E Retirement. It trades about -0.08 of its total potential returns per unit of risk. Sierra E Retirement is currently generating about 0.12 per unit of volatility. If you would invest 2,291 in Sierra E Retirement on September 14, 2024 and sell it today you would earn a total of 13.00 from holding Sierra E Retirement or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Sierra E Retirement
Performance |
| Timeline |
| Applied Finance Explorer |
| Sierra E Retirement |
Applied Finance and Sierra E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Sierra E
The main advantage of trading using opposite Applied Finance and Sierra E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Sierra E can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sierra E will offset losses from the drop in Sierra E's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small | Applied Finance vs. Oberweis Small Cap Opportunities |
| Sierra E vs. Pace Smallmedium Value | Sierra E vs. Boston Partners Small | Sierra E vs. Valic Company I | Sierra E vs. Applied Finance Explorer |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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